KUALA LUMPUR: Boustead Heavy Industries Corp Bhd’s (BHIC) second quarter net profits ended June 2018 dropped 69.85 per cent to RM7.22 million compared with RM23.94 million, a year ago.
Its second quarter revenue, however, improved 12 per cent to RM49.16 million from RM43.77 million, previously.
The decline in net profit was due to lower defence-related maintenance, repair and overhaul (MRO) activities.
BHIC’s executive deputy chairman and managing director Tan Sri Ahmad Ramli Mohd Nor said progress from defence-related maintenance, repair and overhaul (MRO) activities were the contributor to the group’s improved performance this quarter, despite the challenging operating environment.
Additionally, he said the group saw positive contributions from its joint venture companies.
The group’s joint venture companies posted a contribution of RM6.5 million for the quarter under review, driven mainly by favourable foreign exchange translations for Boustead DCNS Naval Corp Sdn Bhd, ongoing progress on the Littoral Combat Ship (LCS) project under Contraves Advanced Devices Group, as well as BHIC AeroServices Sdn Bhd which recorded higher flying hours by the Royal Malaysian Air Force (RMAF) and Malaysian Maritime Enforcement Agency.
For the six months, BHIC’s net profit plunged 56 per cent to RM11.72 million from RM26.65 million. Its revenue had also tumbled 26.31 per cent to RM88.88 million from RM120.61 million.
Assessing the group’s near-term prospects, Ahmad Ramli said the group is encouraged by the new government’s emphasis on the nation’s maritime security and are hopeful that this will bode well for the BHIC’s shipbuilding and MRO activities.
“Furthermore, our major shipbuilding projects, namely the LCS and Littoral Mission Ships (LMS) projects, continue to progress on-track.
“Construction of the first four of six LCS units are currently ongoing, with the keel laying of LCS4 targeted to take place later this year.
“The construction for LMS have commenced with the first steel cutting for LMS1 was done on July 31, 2018. This, along with the contracts awarded to BHIC by the RMAF and Royal Malaysian Navy (RMN), will certainly contribute positively towards the group’s future earnings,” he said.
The group said it is also looking to expand beyond its core business of naval shipbuilding and ship repair with the acquisition of shares in Airbus Helicopters
Simulation Centre Sdn Bhd, which is expected to open up new avenues of opportunity within the Malaysian aviation industry.
“Looking ahead, we are cautiously optimistic about the group’s prospects in terms of the defence, commercial shipbuilding and energy sectors.
“The improving economic landscape and the Malaysian government’s commitment towards boosting national defence are positive indicators.
“We believe this, combined with the positive results of our group-wide transformation programme and strategic marketing and business development efforts, will positively impact the group in the coming months.
“Against this backdrop, we will continue to focus on our defence business, which we expect to be a major contributor to our revenue in the foreseeable future,” he said.
Meanwhile, the board has approved a first interim dividend of 1.5 sen per share for Q2 in respect of the financial year ending December 31, 2018.
The dividend will be paid to all shareholders on November 15, 2018.